Rodman & Renshaw Sees 160% Upside For NeuroMetrix

NeuroMetrix is medical device company aimed at management of chronic intractable pain due to conditions such as diabetes, fibromyalgia and arthritis. The brokerage said the global pain management drugs and devices market was $37.8 billion in 2015 and neurostimulation devices may reach $8.8 billion in sales by 2020.

Compelling Quell

"In our view, the company's Quell platform is differentiated from competitors in that it is a drug-free, non-invasive and wearable neuro-stimulation device that can provide systemic and effective pain relief, and can be worn during both daytime activities and throughout sleep at night," analyst Raghuram Selvaraju wrote in a note.

Quell received FDA 510(k) approval in January 2016 and Selvaraju says it is the only available transcutaneous electrical nerve stimulation (TENS) product FDA-cleared for use during sleep.

Related Link: NeuroMetrix Reports Quell Distribution Deal With WBC Group

The analyst believes that Quell should be able to seize a growing portion of the ever-increasing chronic pain patient population in the United States, currently estimated at 100 million people.

Recent Figures And A Look Ahead

The company reported $7.3 million in revenue for 2015, and $2.3 million for the first quarter of 2016. Selvaraju expects total sales of $11.8 million for 2016, rising to $19.8 million in 2017. Quell sales have grown from $0.8 million in the third quarter of 2015 to $1.2 million in the first quarter of 2016.

Selvaraju expects a loss of $3.09 a share for 2016, with the loss estimated to narrow to $0.81 a share for 2017.

Further, the analyst said the market is under-appreciating the commercial value of Quell and associating the company with earlier-generation products.

"Given the clinical utility of Quell and the substantial market opportunity in chronic pain management, we believe that NeuroMetrix, currently trading at a negative enterprise value, is undervalued," Selvaraju added.

At the time of writing, shares of NeuroMetrix were up 0.56 percent at $1.73.